Law Firm expansion: Can a sale-leaseback help your firm grow?

One of the biggest challenges in business these days is how to maintain that growth. And this is one of the few factors that cannot be solved by the law firms, which have already taken a hit by the last wave of economic crisis. Lacking any extra spending the client may decide to freeze these expansion plans which may translate into less sales and hence less revenues.

Yet, not a single ray of light from the gray clouds. A sale leaseback would mean taking some money off the back burner to finance our growth. In essence, a sale-leaseback is two transfers of a fixed asset in one transaction – the asset is sold and then immediately leased back. While at a glance, we wouldn’t naturally pick professional services as the first industry on the list when we talk about assets that last a long time, there is still opportunity out there. In a sale leaseback many law deal with their own offices, a highly useful example of permanent assets on which they often back sale.

The Benefits of a Sale Leaseback for Law Firms

A sale-leaseback can free up a large amount of capital that is tied up in owning your own office. This additional capital can then be used to fund further expansion, ultimately getting a better return on investment. This can be helpful with cash flow too, as the lease can be negotiated over a long term to provide certainty and stability when it comes to lease payments.

Key Considerations Before Entering into a Sale leaseback

Much the same in the business world, risk would be one of the factors that could not be avoided. Although not without its advantages, Caution must always be practiced because of the unpredictable nature of leaseback contracts.

The first and foremost, though, that involves a landlord entering into a new lease is the starting of the risk. This will also increase your overhead expenses on an ongoing basis, therefore make sure that you are prepared for this by knowing the status of cash flow in your business. To add to your attention you will have to read the requirement carefully. As always, it makes sense to involve a lawyer even in a new lease agreement before you sign to be double sure of not meeting any unforeseen consequences.

The other risks emanating from the transaction could be considered. Disposal does induce one or another of the consequences which are the capital gains charge. As a result, taxes that are to be paid have to be evaluated as an element of the total profit of the deal. Besides that, a balance sheet not regarding fixed assets as heavily may put off any potential lenders. Nevertheless, since the leasing-buyback sale overall goal is to get capital, it is somewhat unlikely that one would also acquire loads of debt around the same time.

A Growing Trend

With interest rates globally still sitting quite high, the trend for sale leasebacks has been growing across all industries. Recent notable examples of successful sale leaseback agreements include:

• Sports brand giants Decathlon completing a €527 million sale leaseback of a European property portfolio

• California based EV charging provider EVgo entering into a sale leaseback of its charging port network for $27m.

• Airlines from Deutsche Lufthansa to Cebu Pacific opting for a sale and leaseback of portions of their Airbus fleets.

These demonstrate the scale of the opportunities available for a range of assets and the growing overall trend of a sale and leaseback as a cheap way of raising capital.

Strategic Growth Strategies for Law Firms: Expanding Expertise and Leveraging Technology

Employment of law firms with the intention of growing a practice can be made through multiple options of the strategic methods that empower a law practice to be visible and offer a high level of services. Through this process a country can specialize in various economic sectors which will ensure long term growth of the economy is not hampered. 

Through such diversification into new areas of practice or deepening the narrower existing ones, law firms could have the ability to attract a more diverse clientele which in turn would potentially fill the gaps in the growing application of specialized legal services. Similarly, a firm mainly operating on corporate law may consider adding intellectual property law or environmental law to its legal offerings, which could make-up a perfect fit particularly for startups, tech companies or industries with specialized requirements for government law. As well, lawyers’ continual education and training become an investment that enables your company to remain knowledgeable about the latest legal trends and changes, which is a further improvement towards your general marketing and client base.

Besides adapting to the ongoing environmental change, the third key strategy for law firm development is introducing IT into the practice and improving the quality of client engagement. Since the modern client has become methodical, they expect accessibility, clarity, and accuracy of the legal assistant services. 

The law firms can live up to these expectations by introducing new legal technology tools that include client portals for tracking of cases, automated billing services, and those relying on AI for providing legal research. Through these technologies, tasks are performed in a way that is efficient and the accuracy and speed of service are increased, this also leads to a boost in customer satisfaction.

 On the other hand, a problem solving approach can position the law firm to extend its reach and also increase its credibility by implementing best marketing techniques such as maintaining an active online presence, visiting and engaging the community events as well as using the customer feedback to improve the services. 

Although the combination of the traditional way of legal excellence and the modern business strategies may seem challenging at first, they can be projected to be the key points for effective law firms’ expansion in a competitive market.

Final Thoughts 

With these in mind, law firms across the globe should consider the sale-leaseback policy of their offices and the like to have the money they need to expand and increase their operations. It is the right moment of peak global interest rates where film assets on sale-leaseback become one option that can be used to squeeze out the funds needed for the company’s development.

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